Baristas say that Starbucks is ignoring a huge problem

AP Photo/Ted S. Warren Starbucks baristas say that a recent initiative to improve customer service proves how out-of-touch the company's executives are with what's really going on in stores.

In interviews with more than a dozen current and former Starbucks workers, employees told Business Insider that serious adjustments need to be made if the company wants to grow sales and maintain its positive, progressive reputation.

"The perception isn't the reality," one Chicago barista told Business Insider. "Most people see Starbucks as a well-run operation, but being on the inside, I've found many flaws and wonder how this place makes money."

Starbucks is at a critical juncture. While the company has consistently increased same-store sales in the US and globally for years, traffic in the second quarter was flat after dropping 2% in the first quarter of 2017 — meaning fewer people are visiting stores. A new CEO, Kevin Johnson, just took the reins from long-time chief executive Howard Schultz. And, the company plans to open 5,000 new stores worldwide by 2021.

Understaffing is running workers "ragged"

Starbucks staffing struggles began making headlines last summer. In late June, Jaime Prater, a Starbucks employee, created a Coworker.org petition that said a "lack of labor is killing morale" at the chain.

"Labor is the real bone of contention, in addition to the drinks that corporate continues to roll out," the petition says. "Baristas also continue to struggle in their stores, with more expectation, with less support staff."

Starbucks leaves most staffing decisions in the hands of store managers. According to the company, regional leaders didn't see major issues last summer, and haven't seen the need for changes beyond the regular course of business over the last year.

"How we staff our stores is the most important thing we do," Kris Engskov, Starbucks' new head of US retail, told Business Insider in an interview. "Our store managers really have great latitude in determining how they're going to staff their store."

Many employees have a very different point of view.

"Most stores are understaffed and I believe that's the way corporate wants it," a barista said. "Store managers would rather be shorthanded rather than pay a penny of overtime."

"You're running around and sometimes it gets a little ragged" with baristas feeling "like they're drowning sometimes," another worker said.

According to baristas, staffing problems have been complicated by the number of jobs that employees are expected to preform. There are now increasing ways for customers to place orders, thanks to mobile ordering and drive-thru. Starbucks is also constantly adding new drinks to its menu that are both gourmet and low-brow, but time-intensive, such as new Frappuccino varieties.

Employees are also expected to establish emotional connections with customers — although some workers say that this core tenant of Starbucks' philosophy is being increasingly undervalued.

"It's frowned upon if I stop to have a conversation with a regular I haven't seen in a while," one employee, who has worked at Starbucks for seven years, said.

"I once had an assistant manager ask me: 'Hey, how can we get you to not connect with customers so much?'" she said. "I stared at him blankly. He continued 'You know, we really have to work on your transaction times, our numbers are down.'"

Three Starbucks employees told Business Insider that they believed that understaffing stores was already hurting Starbucks' bottom line. In December, Starbucks reported that same-store sales in the Americas increased 6%, based on a 5% increase in sales and a 1% increase in customer visits.

"I'd bet my life to say that if they'd kept us fully staffed, that growth would've been in the double digits," said a Starbucks employee who claimed his store's labor had been cut in half last year.

"My team wants to be able to afford rent and groceries."

Starbucks

If Starbucks isn't going to increase the number of people working at a time in stores, employees say the least the company could do is better support and compensate workers for their efforts.

"It's exhausting. And a lot of us can't leave, despite wanting to, because we have health insurance and scholarships," an employee said. "That's all well and good, honestly, but they really screwed us with labor and they really screwed us with our raises."

Last July, soon after reports of understaffing emerged, Schultz published an open letter on Starbucks' Facebook page promising a pay raise in October, enhanced stock options, revamped benefits, more stable scheduling, and a new dress code.

However, this October pay raise replaced the company's annual January raise, according to the company. As a result, Starbucks workers haven't yet received a raise in 2017, and some employees feel salaries are still too low.

According to Glassdoor data, baristas are paid $9.50 an hour, on average. For comparison, average pay for a McDonald's employee is about $8.49 an hour, and the median pay for barista-style servers is $10.28 an hour, according to the Bureau of Labor Statistic.

Starbucks emphasizes that the chain offers benefits beyond hourly pay, including college tuition assistance, 401(k) matching, and the ability to purchase Starbucks stock through the Bean Stock program. While some Starbucks employees said benefits helped persuade them to stay at the company, others said higher pay would better serve workers.

"My team wants to be able to afford rent and groceries," one employee said. "If you had asked partners if they could have the option for higher pay or the college achievement program, somewhere around 90% of all partners would have asked for increased pay."

"I don't know how many times I've heard that we're the most important part of the company," another employee said. "If we're the most important part of the company and our connection is that important, [they shouldn't be] paying as little as they can get away with paying."

A divide between executives and baristas

Starbucks recently launched an initiative that is intended in part to address workers' concerns: the North Star agenda.

Engskov described North Star as a "two-part equation." One part is rallying and training employees to form connections. The other is finding ways for the Seattle corporate "support team" to better support baristas and streamline their work, with fixes such as adapting to mobile ordering growth, making scheduling easier, and adjusting inventory availability.

However, many employees feel the company remains out of touch with the needs of in-store workers.

"Starbucks used to boost me," the seven-year veteran barista said. "I would leave my shift with the energy to go to the gym and to another job and/or school. Now I leave feeling depressed, unwanted, worthless."

"I'm so tired of the games this company has played," she said. The barista told Business Insider that standing on her feet all day and bending at awkward angles while working at Starbucks contributed to developing a painful condition. She said that now she could not afford quit her job at the chain, as she would lose her health insurance needed to treat the condition.

Many said that they felt that the company prioritized customers' needs over employees' well being.

Starbucks executives say that the connections between employees and customers, and corporate staff and employees, are some of the things that are the most crucial to the company's success.

"We know we are not perfect, but we are regularly engaged in discussions with the over 160,000 partners who wear the green apron in the US and continuously work to make their experience even better and more valuable," a Starbucks spokesperson told Business Insider. "We know when we exceed the expectations of our people, they — in turn — exceed the expectations of our customers. To us, every voice matters."

Still, many employees say that Starbucks is falling short when it comes to listening to and supporting baristas and other workers — and that this shortcoming could seriously hurt the company.

"The real frustration for many [Starbucks] store leaders is that, while we get 'way to go' emails from the regional and corporate leaders on sales of Unicorn Frappuccinos and mobile order growth, the inexplicable decline in allocated labor to support these initiatives is needlessly stressful for the store leaders," a manager said. The stress and extra work "ultimately winds up in the lap of the baristas."

In other words, while Starbucks may be growing sales, frustrations are bubbling over in many stores in a way that executives have not addressed in a comprehensive manner.

"I found some of the worst customers were the people who had worked for the company who hadn't worked in the stores," said one employee with experience working at the shop inside the company's headquarters in Seattle. "There's such a disconnect... I don't think baristas feel that they're supported."